COMMUNITY COMMUNITY DEVELOPMENTDEVELOPMENT

Is Your Community Ready?Is Your Community Ready?

Kentucky Institute for Economic DevelopmentKentucky Institute for Economic Development

August 2007August 2007

J. R. Wilhite, CEcDJ. R. Wilhite, CEcD

3-Step Process to3-Step Process to“Economic Development”“Economic Development”

PREPARATIONPREPARATION

MARKETINGMARKETING

SELLINGSELLING

““Community Development” Community Development” is the 1is the 1stst Step Step

““Community developmentCommunity development” is ” is the process of investing the process of investing public resources in ways that public resources in ways that encourage the commitment encourage the commitment of private sector resources.of private sector resources.

When this first process causes When this first process causes the private sector to invest the private sector to invest and create jobs, that’s and create jobs, that’s ““economic developmenteconomic development”.”.

““This new road is an This new road is an economic development project.”economic development project.”

- Misguided local official, 2006- Misguided local official, 2006

Community Development Economic Development

Wayne Foster said:Wayne Foster said:

““It is not easy.It is not easy.

It is time consuming.It is time consuming.

It is sometimes boring.It is sometimes boring.

It is usually expensive,It is usually expensive,

and it requires patience, butand it requires patience, but

community developmentcommunity development isis

a necessary first stepa necessary first step to to

a successful economica successful economic

development program.”development program.”(June, 1995)

WhyWhy Businesses Invest Businesses Invest

To add new capacityTo add new capacity

To produce new productsTo produce new products

To reach new marketsTo reach new markets

To integrate operationsTo integrate operations

Communities Care Communities Care WhereWhere

To expand & diversify the economic baseTo expand & diversify the economic base

To create job opportunitiesTo create job opportunities

To increase wage levelsTo increase wage levels

To increase tax revenuesTo increase tax revenues

To increase the market To increase the market

for other local businessesfor other local businesses

Communities Must ProvideCommunities Must Provide

Accessible locationAccessible location Usable spaceUsable space Skilled workforceSkilled workforce Adequate utilitiesAdequate utilities Reliable servicesReliable services Pro-business climatePro-business climate Fair fees & taxesFair fees & taxes Attractive lifestyleAttractive lifestyle

How to be a winner...How to be a winner...

““There’s no trick to selling horses, There’s no trick to selling horses, as long as you are selling as long as you are selling goodgood horses.”horses.”

John E. Madden, John E. Madden,

central Kentucky central Kentucky

horse breederhorse breeder

Site Selection FactorsSite Selection FactorsArea DevelopmentArea Development, December 2006, December 2006

1. Labor costs 1. Labor costs 95.095.02. Highway accessibility2. Highway accessibility 90.990.93. Corporate tax rate 3. Corporate tax rate 90.890.84. State & local incentives4. State & local incentives 88.688.65. Telecommunications services 5. Telecommunications services 88.388.36. Tax exemptions 6. Tax exemptions 86.786.77. Occupancy or construction costs 7. Occupancy or construction costs 85.585.58. Availability of skilled labor8. Availability of skilled labor 85.185.19. Energy availability & costs 9. Energy availability & costs 82.482.410. High-speed Internet access10. High-speed Internet access 82.182.111. Cost of land11. Cost of land 79.279.212. Low union profile12. Low union profile 78.478.4

Total of “important” and “very important” responsesTotal of “important” and “very important” responses

Site Selection FactorsSite Selection FactorsArea DevelopmentArea Development, December 2006, December 2006

13. Proximity to major markets 13. Proximity to major markets 76.976.914. Availability of land 14. Availability of land 73.373.315. Environmental regulations 15. Environmental regulations 68.968.916. Right-to-work state 16. Right-to-work state 67.167.117. Availability of unskilled labor 17. Availability of unskilled labor 65.365.318.18. Raw materials availabilityRaw materials availability 64.164.118. Availability of long term financing18. Availability of long term financing 64.1 64.1 19.19. Accessibility to major airport Accessibility to major airport 61.461.420.20. Training programsTraining programs 56.056.021.21. Proximity to suppliers Proximity to suppliers 49.349.322.22. Proximity to technical universityProximity to technical university 30.030.023. Railroad service23. Railroad service 20.820.824. Waterway or oceanport accessibility24. Waterway or oceanport accessibility 17.017.0

Total of “important” and “very important” responsesTotal of “important” and “very important” responses

Quality of Life FactorsQuality of Life Factors Area DevelopmentArea Development, December 2006, December 2006

1.1. Low crime rate Low crime rate 70.8%70.8%2. Ratings of public schools 2. Ratings of public schools 64.464.43. 3. Housing costs Housing costs 63.963.94. Health facilities4. Health facilities 60.860.85. Housing availability5. Housing availability 54.454.46. Climate 6. Climate 48.648.67. 7. Colleges & universities in area Colleges & universities in area 44.644.68. Recreational opportunities8. Recreational opportunities 43.743.79. Cultural opportunities9. Cultural opportunities 41.441.4

Total of “important” and “very important” responsesTotal of “important” and “very important” responses

The Local RoleThe Local Role

Active Active local development programlocal development program Everyday point of contactEveryday point of contact Accurate information sourceAccurate information source Ability to respond & decideAbility to respond & decide

Long-term Long-term perspectiveperspective Give a consistent effortGive a consistent effort Make a “place” for businessMake a “place” for business Create new solutionsCreate new solutions

““You got to be very carefulYou got to be very carefulif you don’t know if you don’t know

where you’re going, where you’re going, because you might because you might

not get there.”not get there.”

Yogi Berra, Baseball Hall of Famer & Philosopher Yogi Berra, Baseball Hall of Famer & Philosopher

What happened What happened

in in Hadleyville?Hadleyville?

Part One – “Gung Ho”

““Economic Development”Economic Development”

A deliberate A deliberate programprogram of action, of action, through a through a communitycommunity based effort based effort,, to impact the to impact the locationlocation of new of new businessbusiness investment. investment.

““Community Development”Community Development”

““A processA process

of people working togetherof people working together

to create and/or preserve to create and/or preserve

their desired communitytheir desired community

in its economic, social,in its economic, social,

cultural, political, andcultural, political, and

spiritual dimensions.”spiritual dimensions.”

““A process …”A process …”

An ongoing, structured presence:An ongoing, structured presence:

• point of contactpoint of contact

• realistic work planrealistic work plan

• regular financial supportregular financial support

• supportive stakeholderssupportive stakeholders

• ability to actability to act

Strategies to AvoidStrategies to Avoid

““Bring us the one Bring us the one that nobody wants.”that nobody wants.”

““We’ll just hire us a We’ll just hire us a marketer.”marketer.”

““If we build it, they If we build it, they will come.”will come.”

Choosing a PathChoosing a Path

Participatory Participatory strategic planningstrategic planning

Outside Outside assessment teamsassessment teams

Survey of Survey of existing businessexisting business

Project-specific Project-specific partnershipspartnerships

Business SectorsBusiness Sectors

Office headquartersOffice headquarters Distribution centersDistribution centers ManufacturingManufacturing Research & developmentResearch & development Wholesale & retail tradeWholesale & retail trade ServicesServices TourismTourism AgribusinessAgribusiness

Location FactorsLocation Factors

Business Plastics Distribution Call Center

Labor Skilled Unskilled Educated& flexible

Access Rail & truck Rail, truck,water & air

Lots ofparking

Services Low costpower

Overnightdelivery

Telecommreliability

Other Air qualityregulations

Inventorytaxes

Interstatecall taxes

Digging for DetailsDigging for Details

Where do workers come from?Where do workers come from? What skills do they possess?What skills do they possess? What wage level is required?What wage level is required? What training is available?What training is available?

ED Practice Hint #1ED Practice Hint #1“Expertise”“Expertise”

A successful ED must A successful ED must

know only 2 things:know only 2 things:

1. As much as you can 1. As much as you can

about everything,about everything,

andand

2. All those who know 2. All those who know everything else.everything else.

PartnershipsPartnerships

OrganizationalOrganizational• Intra- & Inter-community Intra- & Inter-community

MarketingMarketing • State, regional groupsState, regional groups

InfrastructureInfrastructure• Railroads, utilitiesRailroads, utilities

FinancingFinancing• Banks, federal, stateBanks, federal, state

Regional CooperationRegional Cooperation Working together to reach “critical mass”Working together to reach “critical mass”ResourcesResources• Human capitalHuman capital• Financial capitalFinancial capital

ResultsResults• Regional Business ParksRegional Business Parks• Multi-County ED AgenciesMulti-County ED Agencies

BenefitsBenefits• Professional staffingProfessional staffing• Broadened program emphasisBroadened program emphasis• Greater site investmentsGreater site investments• Larger market presence Larger market presence

““of people working together”of people working together”

LeadershipLeadership

OwnershipOwnership

SupportSupport

LeadershipLeadership

A County Judge-Executive said:A County Judge-Executive said:

““If we say we do economic development,If we say we do economic development,

and we don’t take this building, and we don’t take this building,

then we’re just chicken(poop).”then we’re just chicken(poop).”(September, 1993)(September, 1993)

OwnershipOwnership

Commits resourcesCommits resources

Respects processRespects process

Understands resultsUnderstands results

Rewards successRewards success

SupportSupport

ED Practice Hint #2ED Practice Hint #2“Stakeholders”“Stakeholders”

While you are out there While you are out there selling businesses on selling businesses on your community …your community …

Who is making sure that Who is making sure that the community is sold on the community is sold on your ED program?your ED program?

Ed Morrison said:Ed Morrison said:

In the years ahead, we will come to In the years ahead, we will come to understand that “community” is the understand that “community” is the

dominant metaphor by which we live. dominant metaphor by which we live.

Community is a messy concept.Community is a messy concept. Everyone has a voice, Everyone has a voice,

regardless of job or regardless of job or social social status. To make status. To make sense of sense of our community, we our community, we must must learn how to make learn how to make

decisions together. decisions together.

(July, 2003)(July, 2003)

What happenedWhat happened

in in Hadleyville?Hadleyville?

Part Two – “High Noon”

Civic EngagementCivic Engagement

Meetings must have:Meetings must have:• an agenda that is followedan agenda that is followed• non-biased leadershipnon-biased leadership• clear rules of conductclear rules of conduct

Players must agree to:Players must agree to:• listen to one anotherlisten to one another• avoid personal attacksavoid personal attacks• offer neither lies nor distortionsoffer neither lies nor distortions• find consensus and move onfind consensus and move on

““to create and/or preserveto create and/or preservetheir desired community”their desired community”

KEEPKEEP what you like and have what you like and have GROWGROW what you want more of what you want more of GETGET what you want and need what you want and need and celebrate and celebrate ALLALL successes successes

Clarke Potter said:Clarke Potter said:

““When I first took this job, When I first took this job,

I drove through the community. I drove through the community.

And then I came back and told the Mayor And then I came back and told the Mayor

they had better get the junk cars out of sightthey had better get the junk cars out of sight

or just forget about economic development.”or just forget about economic development.”(July, 1995)(July, 1995)

““First Impressions” ProgramFirst Impressions” Program

OSU, KSU WVU extension service programsOSU, KSU WVU extension service programs Raise local awareness via others’ perceptionsRaise local awareness via others’ perceptions Volunteers make unannounced visits Volunteers make unannounced visits Disposable cameras provided and usedDisposable cameras provided and used Observations & comments in summary reportObservations & comments in summary report

Webster CountyWebster County,, KYKYOctober, 1998 Strategic PlanOctober, 1998 Strategic Plan Strong value in quality of relationshipsStrong value in quality of relationships

Desire for a more diverse economyDesire for a more diverse economy• quality of employment opportunitiesquality of employment opportunities• diversity of retail basediversity of retail base

Improvements in facilities & servicesImprovements in facilities & services• roads, public safety, and recreationroads, public safety, and recreation

Greater citizen participation & governmental Greater citizen participation & governmental cooperationcooperation

ED Practice Hint #3ED Practice Hint #3

“Differentiation”“Differentiation”

If your business prospects are active on the web …

Can they find you there?

““in its economic dimensions.”in its economic dimensions.”

Gross state productGross state product

Average annual payAverage annual pay

Unemployment rateUnemployment rate

Per capita incomePer capita income

Poverty ratePoverty rate

Educational attainmentEducational attainment

Defining ExpectationsDefining Expectations

GroundbreakingsGroundbreakings Ribbon-cuttingsRibbon-cuttings Fame & gloryFame & glory

• Jobs

• Income

• Tax Revenue

Business ClientsBusiness Clients

New start-up New start-up companiescompanies

Retention & expansion Retention & expansion of existing businessesof existing businesses

Attraction of new Attraction of new business investmentbusiness investment

ED Practice Hint #4ED Practice Hint #4“Prioritization”“Prioritization”

If existing businesses If existing businesses account for account for 100%100% of of existing jobs and existing jobs and 60%60% of of new jobs …new jobs …

Are Are 80%80% of your local ED of your local ED efforts directed toward efforts directed toward meeting the needs of meeting the needs of existing businesses?existing businesses?

Local InducementsLocal InducementsTypesTypes

Employee recruitment & trainingEmployee recruitment & training Utility & roadway extensionsUtility & roadway extensions Site & building improvementsSite & building improvements Tax or fee reductionsTax or fee reductions Low interest loansLow interest loans

UseUse ConsistencyConsistency “ “Claw back” provisions Claw back” provisions Cost/benefit analysisCost/benefit analysis

Cost/Benefit AnalysisCost/Benefit Analysis

BenefitsBenefits• Job creationJob creation• Wages and benefitsWages and benefits• New tax revenuesNew tax revenues• Corporate citizenshipCorporate citizenshipCostsCosts• Impact on existing employersImpact on existing employers• Effect on local utility systemsEffect on local utility systems• Environmental impactsEnvironmental impacts

ED Practice Hint #5ED Practice Hint #5“Return on Investment”“Return on Investment”

It is not the purpose of It is not the purpose of ED to spend “other ED to spend “other peoples’ money” peoples’ money”

It is to make sound It is to make sound investments that lead investments that lead to a reasonable returnto a reasonable return

Value of 100 Jobs to KY Value of 100 Jobs to KY in in Value Added ($ millions)Value Added ($ millions)

$0 $5 $10 $15 $20 $25 $30 $35 $40

Utilities

Manufacturing

Mining

Information

Finance & Ins.

Wholesale

Transportation

Professional

Construction

Health Care

Retail Trade

Lodging & Food

Arts, Recreation

Agriculture

Direct

Indirect

Induced

All values and estimates are based on 2003 data and dollars. KY Economic Development Cabinet, Division of Research.

Value of 100 Jobs to KY Value of 100 Jobs to KY in in New Jobs CreatedNew Jobs Created

0 50 100 150 200 250 300 350 400 450

Manufacturing

Utilities

Mining

Information

Professional

Transportation

Construction

Finance & Ins.

Wholesale

Health Care

Agriculture

Lodging & Food

Retail Trade

Arts, Recreation

Direct

Indirect

Induced

All values and estimates are based on 2003 data and dollars. KY Economic Development Cabinet, Division of Research.

Value of 100 Jobs to KY Value of 100 Jobs to KY in in State and Local Taxes ($ millions)State and Local Taxes ($ millions)

0 1 2 3 4 5 6 7

Utilities

Mining

Manufacturing

Wholesale

Information

Finance

Transportation

Retail Trade

Professional

Construction

Health Care

Lodging & Food

Arts, Recreation

Agriculture

Direct &Indirect

Induced

All values and estimates are based on 2003 data and dollars. KY Economic Development Cabinet, Division of Research.

Daryl Smith said:Daryl Smith said:

Successful Communities…Successful Communities… take advantage of key take advantage of key

eventsevents have a planhave a plan have a producthave a product have capable leadershiphave capable leadership are creativeare creative have a long-term focushave a long-term focus minimize politicsminimize politics

(1998 EDI Thesis) (1998 EDI Thesis)

are working to solve are working to solve the workforce puzzle the workforce puzzle

utilize resources and utilize resources and build partnershipsbuild partnerships

build strong build strong community linkagescommunity linkages

offer quality service offer quality service after the saleafter the sale

always stretch their always stretch their thinkingthinking

Darrell Gilliam said:Darrell Gilliam said:““If you ain’t If you ain’t

got the marbles, got the marbles,

stay out of the gamestay out of the game””

(April, 1992)(April, 1992)

Thanks!Thanks!

J. R. Wilhite, Acting CommissionerJ. R. Wilhite, Acting CommissionerDepartment for New Business DevelopmentDepartment for New Business Development

Kentucky Cabinet for Economic DevelopmentKentucky Cabinet for Economic DevelopmentOld Capitol AnnexOld Capitol Annex

300 West Broadway300 West BroadwayFrankfort, Kentucky 40601Frankfort, Kentucky 40601

Phone:  502-564-7140Phone:  502-564-7140Fax:       502-564-3256Fax:       502-564-3256

Email:    JR.Wilhite@ky.govEmail:    JR.Wilhite@ky.govwww.thinkkentucky.comwww.thinkkentucky.com